Americans are taking advantage of historic new car deals thanks to automakers slashing interest rates and letting owners defer payments, among other incentives.
“I got a deal with 0% interest, plus 120 days until my first payment, which is crazy,” said Scott Carpenter, 60, from Nashville, Tennessee. The contractor brought home a 2020 Ford F-150 Lariat. “It’s like free money.”
Automakers ranging from Ford to Porsche are offering steep incentives to lure in customers at a time when production is being halted amid the grim outlook caused by the coronavirus pandemic. Certain incentives, however, such as interest-free financing for up to 84 months, or no payments for four months, are too attractive to turn down.
“I probably would’ve hunkered down and gotten through the downturn (without a new car),” said Andrew Flaherty, 45, who lives near Minneapolis. “The incentive made it worth it for me.”
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It’s worth it to automakers, too, who were already expecting a downturn after years of record-setting sales growth. The pandemic has accelerated forecasts for a bleak year, with experts predicting a drop in new car sales of anywhere from 20% to 40% from 2019. J.D. Power dropped its forecast of 16.8 million sales for 2020 to 14 million. In 2019, automakers sold about 17 million vehicles.
“The whole world is turned upside down right now, and the auto industry is unfortunately not immune to the wide-ranging economic impacts of this unprecedented pandemic,” Jessica Caldwell, Edmund’s executive director of insights, said in a statement.
The increasing uncertainty prompted some car shoppers to hasten their searches even before incentives were widely available.
“I was worried that manufacturing would slow down, and that factories might have to move to masks and ventilators,” said Amanda Brandt, 44, who lives in Chicago. Brandt bought her 2019 Honda CR-V in mid-February after relocating back to the U.S. from China, where the outbreak started. Brandt, who was teaching English in the southern Chinese city of Shenzhen when she left in late January, talked her parents into getting new cars as well.
“I had my parents’ old car so I could have waited, but we figured we should get the new cars while we could.”
As production halts and dealerships grapple with shelter-at-home restrictions, Brandt’s prescient decision reflects a certain adaptability on the part of consumers.
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Flaherty was planning on swapping out his Porsche Macan S for a Ford Raptor. He ended up getting a 2020 Chevrolet Silverado.
“I saw the GM deals and thought it was a good opportunity to take a look,” he said. And he was pleased with the outcome and the experience. “After owning a long run of German cars, the buying experience was very easy.”
Most of the paperwork was filed electronically, and the Minnesota dealership offered to deliver his new vehicle and pick up his trade-in. Flaherty declined. “It gave me an opportunity to get out of the house.”
Other shoppers may be so inclined. A recent study by Autolist.com of 1,500 shoppers found that 60% of respondents still intended to buy a new car even after the World Health Organization declared the coronavirus a pandemic March 11.
“We were surprised to see just how many shoppers still planned on a new car in the midst of a crisis,” said Chase Disher, analyst at Autolist.
Dealers are helping shoppers in any way they can.
“They wheeled and dealed on this thing,” Carpenter said about his new F-150. “Deferred payment…I couldn’t pass it up.”